Policy to define Ecommerce business like Flipkart, Snapdeal likely

Are Flipkart and Snapdeal ecommerce portals, platforms or marketplaces? Are they small enterprises or large? The government will soon answer these questions by defining ecommerce units and their operations in a policy.ET Bureau | November 06, 2015, 08:23 IST

Are Flipkart and Snapdeal ecommerce portals, platforms or marketplaces? Are they small enterprises or large? The government will soon answer these questions by defining ecommerce units and their operations in a policy.By Kirtika Suneja

NEW DELHI: Are Flipkart and Snapdealecommerce portals, platforms or marketplaces? Are they small enterprises or large? The government will soon answer these questions by defining ecommerce units and their operations in a policy.

The department of commerce has asked the nodal electronics and IT department to frame the policy, which will contain the definition of ecommerce units, classify them by size and scale and set norms for the workforce and the procedures to set up shop in other countries.

There is no clear definition of ecommerce as of now, which has led to confusion and allegations that some companies are violating foreign investment rules. The current policy does not allow foreign investment in business-toconsumer ecommerce. Companies such as Flipkart and Snapdeal say they are online marketplaces that bring buyers and sellers together. “Today, there is no definition. Brick-and-mortar units are suffering and ecommerce is growing. Everyone will start buying from the comfort of the mobile phones and you can’t stop this,” a commerce department official said. Industry experts said such guidelines could help online companies get incentives or easier access to do business here.

“The policy will mention what is an ecommerce unit and what all services they offer. Such definitions help the government offer better incentives to the sector by giving some kind of a revenue cap,” said an official from industry body Nasscom. “We want an ecommerce policy that can generate employment in a stable environment. Then is the issue of portals. Where do you set up these portals?

Should there be foreign investment in them and if yes, then how much,” the commerce department official added. Drafting a policy for the fastgrowing ecommerce sector, which as per a study by PricewaterhouseCoopers is poised to grow to almost $20 billion by 2020 definifrom $12.6 billion in 2013, has become a mammoth task for the government with no less than six departments engaged in the process.

A policy has also become important because of pressure from India’s trading partners to take a stand on ecommerce. “There is a thinking on ecommerce in BRICS and it is coming up in the WTO also. This is inevitable and it is better that we start working on it so as to influence the outcome,” the official said. The government is considering accepting the best practices of the ecommerce sector as part of the negotiations on joining the Regional Comprehensive Economic Partnership even as it is yet to take a call on opening up the sector completely to foreign investors.

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